Several provisions in the Colorado Constitution prevent the State and school districts from raising and expending funds necessary to establish and maintain a thorough and uniform system of free public schools. One of those provisions is the Taxpayer’s Bill of Rights (TABOR),[1] effective as of December 31, 1992, which creates comprehensive procedural barriers for state and local governments to increase either their spending or revenues.


TABOR requires that the state and all school districts obtain advance voter approval for any new tax, tax rate increase, mill levy above that for the prior year, valuation for assessment ratio increase for a property class, extension of an expiring tax, or tax policy change directly causing a net tax revenue gain.

TABOR limits the tax revenue a school district can raise to a maximum annual percentage change in fiscal year spending equal to inflation plus the annual percentage increase in student enrollments (local growth), adjusted for revenue changes approved by its voters. School districts are also limited to a maximum annual percentage change in property tax revenues equal to the annual percentage change in inflation and local growth, adjusted for property tax revenue changes approved by voters. If revenues exceed TABOR limits, the excess must be refunded to taxpayers in the next fiscal year[2] unless voters approve an offsetting revenue change (known as “deBrucing” for Douglas Bruce, the TABOR author). School districts refund excess revenues by reducing their mill levy in the next taxable year.

Prior to the adoption of TABOR, the general assembly controlled property tax rates and property tax revenues available to school districts and, thereby, the level of state funding for public education. When it adopted the 1988 and 1994 amendments to the Public School Finance Act (PSFA), the general assembly used this ability to establish an essentially uniform mill levy among all of the school districts and allocated state funding through the total program formula to provide nearly all school districts with the same base level of funding through the PSFA. In this way, the general assembly established a relatively equitable system of financing school general operating expenses supported by a uniform system of local property taxation. In 1991, 133 of 176 school districts, representing the large majority of the state’s population, levied a uniform property tax of 40.080 mills.

Prior to the adoption of TABOR, school districts generally collected and spent the same amount of property tax revenue each year. School district mill levies were adjusted each year in response to changes in the total value of local taxable property and the revenues required to support educational services. The property tax provided a stable source of revenue relatively unaffected by changes in economic conditions.

What’s Wrong with TABOR

TABOR prevents school districts from providing education funding by property taxation. School districts may levy no more than the same number of mills each year, unless that mill levy would raise more property tax revenue than TABOR permits (inflation plus local growth), in which case, the school district must reduce its mill levy. An increase in the total assessed valuation of taxable property forces a mill levy reduction to avoid receiving property tax revenues in excess of the TABOR limit. However, if for any reason the mill levy subsequently produces lower revenues, it cannot be increased even to its former level without a taxpayer vote. In school districts with increasing property values, TABOR steadily drives mill levy rates down.

Due to TABOR’s self-executing, continual reduction in school district mill levies, the uniformity of property tax burden achieved in 1991 no longer exists and continues to deteriorate. In 2004-05, school district mill levies for their PSFA total program ranged from 3.738 to 40.080, with a statewide average of 23.812. These mill levy declines have occurred on the educationally irrelevant basis of increases in local property values. The progressive decline in school district mill levies bears no relationship to the costs of providing educational services and has substantially deprived the state and the school districts of the most important historical source of education revenues.

The decline in school district mill levies has caused the local share of PSFA revenues to grow at a slower rate than total program funding, requiring a greater contribution from state funds every year. The state share is steadily displacing local property tax revenues as the primary source of education revenues. In 1994, the state and local shares were approximately equal, but in the 2009-10 budget year, the state share has increased to approximately sixty-five percent of the total.

Due to the displacement of local property taxes as a source of education funding, and because the state itself suffers from a similar downward “ratcheting” effect on its revenue and expenditure levels, the state is effectively incapable of providing the level of funding necessary to fulfill the mandate of the Education Clause. This has resulted in a decline in overall school funding.

TABOR specifically precludes school districts from withdrawing from or refusing to participate in programs mandated by state or federal law. School districts do not have the option to either obtain the funding necessary to comply with the mandates of education reform legislation and the Consolidated State Plan or to decline to expend the limited funds available to comply with those mandates. School districts are statutorily and constitutionally limited in their ability to generate revenues from local resources, but are dependent upon the state, which has consistently failed to provide sufficient funds to meet the qualitative mandate of the Education Clause and the requirements of education reform legislation and the Consolidated State Plan.

Additional Resources on TABOR

[1] Colo. Const., art. X, §20.
[2] This provision of TABOR was suspended at the state level in 2005 for five years as a result of the passage of Referendum C. During the five year Referendum C “time out from TABOR”, the state is allowed to keep all revenue it brings in from Colorado’s tax rates.